XPeng Gaining Strength

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XPeng Gaining Strength

seekingalpha2021-09-08

Summary While August deliveries dipped slightly m/m, the transition to the G3i facelift in production can reignite September's deliveries as P7 sales remain strong. The P5's strong demand is expected...

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EriViL
·2021-09-09
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line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nXPeng Gaining Strength\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-09-08 15:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4453912-xpeng-gaining-strength><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nWhile August deliveries dipped slightly m/m, the transition to the G3i facelift in production can reignite September's deliveries as P7 sales remain strong.\nThe P5's strong demand is expected...</p>\n\n<a href=\"https://seekingalpha.com/article/4453912-xpeng-gaining-strength\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XPEV","symbol_name":"小鹏汽车","start_time":0,"source_url":"https://seekingalpha.com/article/4453912-xpeng-gaining-strength","article_id":"1150074078","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1150074078","pubTimestamp":1631085426,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Summary\n\nWhile August deliveries dipped slightly m/m, the transition to the G3i facelift in producti","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XPEV":"小鹏汽车"},"translate_title":"小鹏的力量","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XPEV":0.9},"content_text":"Summary\n\nWhile August deliveries dipped slightly m/m, the transition to the G3i facelift in production can reignite September's deliveries as P7 sales remain strong.\nThe P5's strong demand is expected to lead a stellar Q4 with management targeting deliveries at 15,000 units by the end of the quarter.\nLong-term growth plans within more international geographies and more vehicle models are supported by higher capacity.\n\nShares in up-and-coming electric vehicle manufacturer XPeng (XPEV) had a muted performance in August, with returns pretty flat, although the company moved forward with expansion plans and reported strong August deliveries. Even with these developments aiding growth and solid numbers as seasonal demand begins to peak late in Q3 and through Q4, regulatory oversight, even in separate industries, could spill over and limit near-term upside.\nAugust Deliveries\nXPeng took the upper hand against NIO again strictly based on numbers, although the two compete in different price segments and ultimately different targeted consumer bases. August deliveries hit 7,214 vehicles, up 172% y/y but down just over 10% m/m after a strong July; the P7 witnessed a solid month, reaching a record month of 6,165 units, up 209% y/y.\n\nData from XPeng\nBy vehicle type, it's visible that the P7 has witnessed strong demand and an acceleration of deliveries through Q2 after the company suffered during February, during which it delivered just over 2,200 vehicles. Deliveries of the P7 doubled in March, hovered in April, after which they exploded 27%,25% and 28% m/m through to July's 6,054 figure. The G3, on the other hand, witnessed some weakness - when looking at total deliveries, the P7 is the pure driver, pushing monthly figures higher as the G3 slumped. July broke a four-month slump for the vehicle, while August saw some impacts to the G3 due to a production shift to the new facelift, the G3i.\nSeptember will be crucial for XPeng for three main reasons: 1) how does the G3 perform with the new facelift? Will the model be able to recover off of August's impacted performance and resume growth? 2) can the P7 continue to show m/m growth and push to a new record? XPeng shipped a batch of the P7 to Norway, but those vehicles might not show up on deliveries until Q4. 3) the P5 - XPeng is planning to launch the updated sedan, at an RMB160,000-230,000 price range, during the month with deliveries beginning in October. Will the car translate pre-order hype and elevated interest into strong deliveries in its opening month in October? Managementstatedthat demand is higher for the P5 than it was for the P7 in the pre-order phase and still witnessing strong momentum, so it'll need to back that up with tangible results.\nQ2 Financials and Guidance\nAs is the case with any company targeting very high growth rates, XPeng's recently reported quarterlyfinancialsreflect the rising costs needed to grow at a high pace. Q2 financials were strong - solid revenue growth driven by the 30.4% q/q rise in deliveries, margin expansion and its war chest of cash still intact. However, net losses lagged as operating expenses grew, in similar fashion to NIO (NIO).\nA quick snapshot of XPeng's financial performance:\n\nrevenues of RMB3.761 billion (US$582.5 million), +536.7% y/y and +27.5% q/q\ngross profit of RMB448.6 million (US$69.5 million), not comparable [+2861%] y/y and +36% q/q\ngross margin of 11.9%, up 1460 bp y/y and 70 bp q/q\nvehicle margin of 11.0%, up 1660 bp y/y and 90 bp q/q\nnet loss of RMB1.194 billion, -4.7% y/y and -51.9% q/q\ncash and equivalents of RMB32.87 billion (US$5.09 billion)\n\nXPeng's financial shape is solid - the company has more than enough cash to execute its growth plan, and soaring revenues are leading to some operating leverage within margins. A second consecutive quarter of double-digit margins is a positive for the manufacturer, demonstrating that it is reaching a scale where its revenue growth outweighs materials and input costs for vehicles. For Q2, revenues grew by 27.5% while total costs of revenues grew by 26.1% - it's a small difference, by one that paves the way for more operating leverage in the future, especially within earnings and profits.\nFor Q3, XPeng guided strong growth in deliveries, +23.5% to +29.3% q/q and +150.6% to +162.3% y/y, for a projected 21,500-22,500 units. As of right now, XPeng has delivered 15,254 vehicles, meaning it would need just 6,000 to reach its lower end of guidance. Revenues are expected to be in the range of RMB4.8-5.0 billion (US$744-775 million), +141.2% to 151.3% y/y.\nGiven that the company is rolling out with deliveries of the G3i on top of strong momentum in P7 sales, guidance should be easily achievable - to reach the high end of guidance at 22,500 units, XPeng would not even have to show sequential growth. Compare that toNIO, which has seen two months of sequential declines in deliveries, and needs 50% m/m growth, or over 9,000 deliveries, to reach its guided figures. Given the respective trends and strengths, XPeng looks to be on track to match or possibly exceed NIO in terms of quarterly deliveries for the first time.\nNew Developments\nWhile Q3 is shaping up to be a strong quarter for XPeng in terms of revenues and deliveries, the manufacturer has more drivers in place for growth in Q4 and beyond. A few key developments have surfaced in the past month, settling in alongside popularity with tech-savvy consumers, advancing tech, high-end specs and ratings, new vehicle models and facelifts asfuture catalysts.\nXPeng has shown a tremendous ability to grow, and this stems in part from the company's rapid manufacturing process - it produced 10,000 units of the P7 in under 6 months. To reiterate, the company just initiated a production shift to the G3i, and has mass production starting soon for the P5. XPeng sees that demand is getting stronger and stronger, and actually expects less of a challenge scaling up P5 production compared to the G3 and P7 due to sourcing necessary components earlier on in the year. So the combination here of growing demand in pre-order phase and less obstacles to mass production in terms of supply constraints sets up a favorable trajectory for the P5 to reach 10,000 deliveries around the end of Q1 2022.\nIn addition to the P5, XPeng is working towards broader expansion of its vehicle lineup - two more are in the works, but the company won't be releasing any details at the moment, similar to NIO. A third model, still yet to be announced, will occupy the RMB350,000-500,000 price range, a jump up to a higher pricing segment. XPeng has not detailed whether the cars will be sedans or SUVs, but stepping into a higher segment can increase its targeted market and customer base.\nWhile it could be a challenge to enter a high-end or luxury market against more established peers in those respective segments, XPeng has built a sustainable image within its current markets that can translate to success. The P7 outsold Audi's A4 last month, as the vehicle \"has already achieved number two in terms of sales in Class C sedan, and [G3] is ranked number 1 or number 2 in the market.\" Core strengths in R&D help differentiate its vehicles from competitors and drive these sales figures.\nAn ambitious long-term plan was also unveiled. While these three models are expected to surface before 2023, XPeng is making plans beyond that frame - it wants to develop 2 to 3 new models each year past 2023 driven by XPILOT 3.0 and 4.0, while the 2022 vehicles should be built with XPILOT 3.0 and 3.5. International expansion in both left and right-hand driving countries also is part of the expansion plan, with worldwide shipping aiming to be available by 2023 as the company sees international as a large volume driver. However, branching out to six to ten models could limit production capacity to tens of thousands, limiting the company from dominating with hundreds of thousands of sales in one vehicle line like Tesla (TSLA).\nTo be able to find high levels of volume both domestically and internationally, XPeng needs high capacity. Q2's call confirmed that the proper capacity is established, and not just for the future - the company increased capacity at Jiaoxin, and is aiming to reach deliveries of 15,000 units per month by Q4, implying production at or above that level. So Q4 deliveries could be set to exceed 30,000 units, or +33% q/q from Q3's guidance. Zhaoqing's phase 2 production was kicked off in August, doubling capacity to 200,000 units by mid-2022. Guangzhou's first phase is expected to complete in Q1 next year with production beginning in Q3; thus, XPeng's 2022 is set to see a surge in production capabilities. Total capacity overall looks to sit near 550,000 units at maximum, although that might not be seen until 2023/24.\nKeep in mind that XPeng's stock can be adversely impacted by negative developments within the broader regulation imposed in tech by the Chinese government. E-commerce, education and gaming have already come under fire, and while electric vehicle companies like NIO, XPeng and Li (LI) have been relatively unaffected, negative sentiment as a whole can depress returns. In addition, XPeng's app was one of hundreds ofappsthat the Guangdong Communications Authority ordered to amend for cybersecurity in January; as the company's ecosystem grows, and its car continue to advance technologically, the amount of data generated by users and cars will grow exponentially, and data collection and storage issues could arise with international customers like that of DiDi (DIDI) - where international users' data could be stored and transferred to a country outside of their residence.\nOverall\nXPeng is finding its stride of growth, with a strong Q3 underway as the G3i hits the market in September to close out the quarter. Q4 will be kicked off with the P5, as well as a goal to reach 15,000 monthly deliveries before the end of the quarter, setting up for an impressive yearly trajectory after deliveries slumped to just over 2,000 units in February. 2022 is shaping up to be equally as strong, with capacity expansion at Zhaoqing and production commencement at Guangzhou slated to occur, with more potential international expansion. Capacity expansion aids its long-term growth targets within geographies and within its vehicle models. However, risks stemming from government regulation and potentially overdoing itself with ambitious vehicle lineup expansion plans are two to watch. XPeng is shaping up to beNIO's biggest challenger, and as such, earns itself a bullish rating ahead of the Q4 setup.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":889480078,"gmtCreate":1631168817194,"gmtModify":1676530485792,"author":{"id":"3577087216911488","authorId":"3577087216911488","name":"EriViL","avatar":"https://static.tigerbbs.com/f37d027290c1cdf3fa6cdba6443077c6","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/889480078","repostId":1150074078,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":22,"commentSize":1,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}